Budget plan offers little more for cities, towns

CONCORD - Gov. Maggie Hassan's $11 billion budget calls for an overall spending increase of $184 million over the next two fiscal years, but cities and towns make out only slightly better under her plan than under the current budget.

The governor, acknowledging that slow revenue growth prevents her from restoring all recent cuts to municipalities, prioritizes her proposed spending hike to the state university and community college systems, the mental health system, hospitals and an expansion of Medicaid.

The key revenue increases to fund the additional spending would come from casino gambling at one facility in the southern part of the state, providing $80 million, and a 30 cents-a-pack hike in the cigarette tax, providing $40 million.

Hassan's budget plan, which now heads to the House Finance Committee for review, calls for continuing most cuts to, or caps on, local revenue sharing that were imposed over the past several years by the most recent Democratic-controlled Legislature and the Republican-controlled Legislature that followed it.

According to the nonpartisan Center for Public Policy Studies, "Not counting adequate education aid, state aid to cities and towns fell 36 percent from fiscal 2009 to fiscal 2013."

Hassan does call for adding back modest amounts in several areas.

Figures compiled by the state Legislative Budget Assistant's office and provided by the public policy center show the state in 2009 capped rooms and meals tax distribution to cities and towns at $58.8 million, suspending a state law that called for increases as a percentage of total rooms and meals tax receipts.

Hassan's budget continues flat funding for fiscal 2014, but in fiscal 2015, the second year of her budget plan, she would increase it by $5 million.

"It's an increase they have not seen since 2009," said center deputy director Daniel Barrick. "They've been at the same level for the past five years."

Hassan estimates overall rooms and meals tax revenue going from $249 million on the current fiscal year to $256 million in 2014 and $267 million in 2015. The amount not sent to cities and towns goes into the general fund for overall state purposes.

A separate general revenue sharing program, which draws primarily from Business Profits Tax receipts, had been level at $25.2 million-a-year from 2001 through fiscal 2009.

The 2009 Legislature ended the funding and it has not been restored since, according to the LBA figures.

Hassan also restores no money to this program.

The state had been subsidizing a portion of public employees retirement funds, to the tune of as much as $51 million in fiscal 2009 and $44 million in 2011, according to the LBA figures.

That amount was cut to $3.5 million in fiscal 2011 and to zero in the current fiscal year, 2013.

Hassan does not restore any of that funding in her budget for fiscal 2014 and 2015.

"Though the state's slow revenue growth prevents us from restoring all cuts made in past budgets," said Hassan spokesman Marc Goldberg, "Governor Hassan worked to ensure that her fiscally responsible balanced budget begins to restore funding to local communities in key areas, including meals and rooms distributions and aid to schools."

She continues to fully fund state education adequacy aid at about $950 million in each of the two fiscal years.

Hassan's office said her total school building aid contributions would be $46 million in fiscal 2014 and $50 million in 2015. The current budget called for spending $48.8 million in 2012 and $47 million in the current fiscal year, according to the LBA figures provided by the public policy center.

The governors office said her budget also provides $14.8 million over two-year budget cycle in education tuition and transportation assistance. That's an increase of $1 million over the current two-year budget.

Her budget also calls for $45.1 million over the two-year budget period in catastrophic aid to local schools, which is an increase of $2 million over the current biennium.

Hassan would provide $3 million in fiscal 2015 to resume funding public water and wastewater projects for the first time in five fiscal years.

Charles Arlinghaus, president of the conservative Josiah Bartlett Center for Public Policy, said that viewed broadly, "the operating part of the budget breaks down to what we send back to cities and towns and what we keep in Concord.

"Under the governor's budget," he said, "the half that goes back to cities and towns would get a very modest increase and the half that is government in Concord would get a much bigger increase.

"Most of the cuts that were imposed over the past several years were on the things we do in Concord and less on the cities and towns," he said. "So in a way, it evens out."

The budget process is just beginning, however. Traditionally, it does not end until the final days of June, just before the end of the current fiscal year and the July 1 beginning of the next one.